Companies facing small markets or resistance to their value proposition could benefit from working with their competitors to raise awareness of their sector or product category. The experiences of Australia’s wine growers and avocado farmers provide instructive examples.
Why don’t Australians drink much whiskey? They’re hardly known for being abstemious. Part of the answer is that they tend to drink beer and wine. But another part of the answer is that whiskey brands haven’t made a concerted effort to get them to really try whiskey. Perhaps they should, because Australians have been lured into changing their drinking habits in the past.
Rewind to the 1960s and Australian wine consumption was way down on today’s level. So, wine producers got together and educated the public on the nuances of fine wine. Now Australians are drinking four times the amount of wine they drank in 1961 and are among the largest consumers of wine on a per capita basis in the world.
This is not a one-off. Back in 1998 real men didn’t eat avocados. At that time Australians were eating less than 1kg of avocados per capita per year. After a series of industry-sponsored campaigns, this has now grown to 3.88kg and is above the figure for the U.S.
In business after business you find companies in the same position today that the CEOs and marketing managers of wine and avocado producers were in back in the day.
Natalie is the marketing manager of a well-known brand of American bourbon whiskey. She and her sales manager face a lot of competition within the spirits category as there’s a wide range of competing spirit drinks — gin, vodka, rum, and so on. And within the whiskey category there’s Scotch whisky, Irish whiskey, and bourbon to choose from. Looking at bourbon’s market share of the liquor category is like peering down a microscope.
When I asked Natalie what her company was doing about noncustomers (people who have never even considered trying the product) her reply was terse: “We only target ‘spirit’ category buyers. There’s no difference in our approach to non-whiskey buyers.” She described the company’s approach as “short-termism.”
Hilary, CEO of one of Australia’s leading businesses in natural medicines, also has a lot of noncustomers. Many Australians won’t touch natural medicines because they’re afraid that the products don’t work and could even be harmful. Hilary admitted to me: “There’s a job yet to be done just with raising the credibility of natural medicine to reach the industry’s nonconsumers.”
I asked Tim, head of an IT recruitment company, if he faced noncustomers. “Sure do,” he said. “A noncustomer for us is an organization that has made a decision to build their own talent team and have come to a firm position that they will not use recruiters. They want to do it themselves. They develop an in-house mindset. In the past, we’ve put them in the too-hard basket.” Again, these noncustomers have set their minds against the whole recruitment industry.
So how did the wine and avocado producers fix their problems?
They invested in “coopetition” — simultaneously collaborating and competing with rivals.
This required them to cooperate at the industry level to grow and improve the industry while at the same time compete at the firm level for market share. Organizations such as Wine Australia were formed to “promote the sale and consumption of Australian wine internationally and domestically,” which included large-scale wine exhibitions with producer-hosted wine tastings.
Coopetition requires taking a long-term view. The wine industry educated the consumer — fully — on grape varieties, wine types, and styles. Before the 1960s Australian wine consumers were relatively unsophisticated, having grown accustomed to sweeter, lower-quality wines. Producers also took the lead in introducing industry regulation on the quality and consistency of products and established a symbiotic relationship between the improving palate of Australian wine consumers and the improving quality of Australian wine.
The Australian avocado industry did much the same. Part of their success is down to an industry body, now called Avocados Australia, whose role is to “provide a range of services to our members and the broader industry to foster growth and development.” Coopetition is clear: “By working together we seek to continually improve our growers’ ability to provide a healthy, profitable and safe product for all consumers.”
Avocados Australia’s activities are funded by grower levies. As Ray, the Chairman of a growers’ cooperative and himself an avocado grower, pointed out to me “industry leaders have always been able to persuade growers to support levies which go towards research and promotion.”
Of course, coopetition at scale in a developed market requires requires serious and sustained effort. No wine or avocado producer achieved the noncustomer shift alone — it required organization and combined effort. So start by sizing up the opportunity. Is it worth chasing? If your answer is “yes” then reach out to your competitors and other industry participants, such as suppliers, and get organized. Coopetition could benefit everyone involved.